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In April 2024, the UK announced a significant step forward in advancing its open banking framework and reinforcing its leadership in the field while introducing what is called Smart Data. Smart Data refers to schemes enabled by legislation that allow secure sharing of customer data across different sectors at the request of the customer, with authorized third parties. These schemes aim to enhance service personalization, increase economic efficiency, and improve consumer access to a range of services. Smart Data extends beyond financial data to include sectors like energy and transportation, facilitating broader data mobility and innovation. It all started with Open Banking, then extended to Open Finance, and is now looking to expand across other industries. The concept of 'open data' is not new. What is new, however, is the attempt by the UK government to propose a framework that the industry can rely on and use to facilitate the interoperability of user experiences. Open Banking and Open Finance were conceived with the idea of relying on a shared, common, and open standard. In the US, the Financial Data Exchange (FDX), a non-profit organization, took on the challenging task of defining such a standard with the participation of the financial ecosystem. Today, it has reached the status of the de facto standard in North America with over 76 million accounts relying on permission-based, secure APIs to exchange financial data. The value of open banking transactions worldwide reached 57 billion U.S. dollars in 2023, and it is expected to increase sharply. The number of open banking API calls is estimated to 580 billion in 2027, signaling the rapid expansion of open banking services and their integration into various financial ecosystems. The document from the Joint Regulatory Oversight Committee (JROC) outlines proposals for the establishment of a Future Entity to oversee UK open banking, succeeding the current Implementation Entity, Open Banking Limited (OBL). The proposals aim to transition from the current framework, set by the Retail Banking Market Investigation Order 2017, to a more comprehensive and evolved system. Key points include: Establishment of an Interim Entity: Prior to the full establishment of the Future Entity, an Interim Entity will be created to handle non-Order workstreams and ensure continuity and effective transition. Future Entity's Role and Structure: The Future Entity will play a central role in developing new and improving existing open banking propositions, which will enhance competition and innovation within the financial sector. It is proposed to be structured as a company limited by guarantee. Regulatory Framework and Smart Data: The Future Entity will operate under a new regulatory framework anticipated in the Data Protection and Digital Information Bill, allowing it to expand into Smart Data schemes across various sectors. Key Takeaways 1. Enhanced Coordination and Standardization: The Future Entity will coordinate and standardize the open banking experience across all participants, improving consistency and interoperability of user experiences. 2. Regulatory and Funding Model: A long-term regulatory framework will guide the Future Entity, emphasizing safety, consumer protection, and sustainable funding through a fair model across the ecosystem. 3. Adaptability and Innovation: The proposals highlight the importance of adaptability in regulatory and operational structures to foster ongoing innovation and accommodate future technological advancements. Examples of open banking and open finance use cases If the document does not specify particular future technological advancements in detail, it does however, emphasize the need for the Future Entity to be adaptable and responsive to evolving technological landscapes. Here are some general areas of technological advancements implied within the document: Premium APIs: Development and standardization of premium APIs to enhance open banking services, facilitating new and improved functionalities for payment initiation and data sharing between financial institutions and third-party providers. Smart Data Schemes: Expansion into Smart Data schemes that go beyond traditional banking, potentially involving other sectors like energy and transportation, aiming to harness new technologies for broader data sharing and integration. Open Finance: Exploring open finance technologies that extend the principles of open banking to other financial products such as savings, investments, insurance, pensions, and mortgages, thereby creating a more interconnected and seamless financial services ecosystem. Enhanced Security and Privacy Technologies: As data sharing schemes expand, there will be an increasing need for advanced security and privacy technologies to protect sensitive consumer and business data across different platforms and services. These areas reflect an anticipation of adapting to and incorporating future technological advancements that could significantly affect how financial services operate, ensuring that the regulatory framework and entity structures are capable of supporting these advancements. #openbanking #openfinance #smartdata

When it comes to open banking, the potential use cases are bound to spark your imagination. Far from exhaustive, this final installment, Part 4 of our blog series, examines the most popular use cases across retail, commercial banking and wealth management. Part 1: Unlocking the Future of Finance: Navigating the Rise of Open Banking in America Part 2: Breaking Down the CFPB’s Announcement Part 3: What about Canada? Part 4: Open Banking Use Cases: Show me the Money! Reminder of how Open Banking works - See Part 1 for details Source: Financial Data Exchange: 8-15-2023 ‘Getting Started with Open Banking’ The value of open banking transactions worldwide reached 57 billion U.S. dollars in 2023, and it is expected to increase sharply. The number of open banking API calls is estimated to 580 billion in 2027, signaling the rapid expansion of open banking services and their integration into various financial ecosystems. Non-exhaustive list of Open banking use cases examples 1. How Consumers Benefit from Open banking Account Aggregation Account aggregation is among the most favored features in financial services. Many companies already provide this service through APIs, enabling customers to view an array of accounts all in one interface. This feature allows users to conveniently monitor their credit cards, investment accounts, and loan balances together. It even integrates consumer and business banking, showcasing everything from multiple providers in one streamlined dashboard. Examples: Envestnet/Yodlee, Finicity, Flinks, MX, Plaid, Tink Personal finance management The recent surge in personal finance management (PFM) tools has transformed how customers view and manage their finances. These tools provide a comprehensive snapshot of one’s financial health, categorizing expenses and displaying remaining monthly budgets, all through a unified interface that aggregates data from various accounts. Centralizing this data not only offers banks and financial providers clear insights into customer needs but also empowers consumers with a detailed understanding of their financial performance. This creates valuable financial insights. While financial and wealth management are longstanding practices, open banking has significantly expanded the capabilities of PFMs. It enables banks to integrate their own APIs across various business units and facilitates connections with APIs from other banks. This evolution in open banking has led to a wider array of financial management services, thereby enhancing customer choice and allowing providers to deliver customized products more effectively. Examples: Akoya, Envestnet/Yodlee Spiir, Mint "In this new era of open banking, smaller banks will have the opportunity to compete on a level playing field with larger institutions. The ability of smaller financial institutions to launch new products, tools, and customer benefits enabled by open banking data will drive their growth and improve customer retention.[1]"Farouk Ferchichi - Group President, Envestnet Instance credit risk Open banking dramatically streamlines credit applications by providing lenders with an almost instantaneous overview of an applicant’s credit history. Previously, assessing creditworthiness was a cumbersome process, requiring the collection of various documents from multiple banks and institutions, which not only delayed credit provision but also deteriorated the customer experience. With access to a wealth of instant banking data, lenders and underwriters can now make faster, more informed decisions. Additionally, consumers can swiftly identify the financial products they are most likely to qualify for. Instant access to credit risk assessments enables them to use comparison sites for loans and credit cards, getting pre-approval indications before making formal applications. This rapid assessment capability has significantly fueled the growth of Buy Now, Pay Later options within the financial sector. Examples: Affirm, Afterpay,SOFI, Zip Pay Subscription management While account aggregation and PFM services are already established, subscription management is a relatively new addition. This feature provides both insights and control over one's finances by detecting all recurring payments and displaying them in a single interface. These could range from streaming services and gym memberships to utility bills and mortgage payments. Customers can easily manage these recurring payments, for example, by canceling unwanted subscriptions or receiving alerts for upcoming dues. The integration of subscription management within open banking platforms allows for effective oversight of various transactions, especially when a single interface can consolidate recurring payments from multiple accounts across different banks. For banks and financial institutions, this can translate into reduced customer support costs related to recurring payments, improved customer retention rates, and enhanced opportunities to cross-sell financial products. Examples: ApTap, Subaio Opening new accounts Opening a new bank account has become significantly easier and quicker, thanks largely to advancements in the Know Your Customer (KYC) process. Banks traditionally gather extensive information from new customers before opening an account to ensure security and minimize fraud risk. Additionally, this onboarding process aids in profiling the new customer. Open banking facilitates the seamless transfer of bank data, ensuring that critical information such as address, occupation, income details, name, date of birth, and credit history are all accurately synchronized. This efficiency transforms the account opening process into a smoother experience for customers, making rapid account setup not just a convenience but a competitive necessity. As the first online interaction a customer has with a bank, the digital account opening sets the bar for their expectations regarding speed and user experience, particularly for certain customer segments. Examples: AuthentI, Dnow, Onfido Account portability The Consumer Financial Protection Bureau (CFPB) has already announced the 1033 rule expected to be final in 2024, empowers consumers by giving them more control over their financial data. This could lead to better financial management tools and services tailored to individual needs. For instance, the rule will enable consumer’s financial data portability to easily move their bill pay data from one bank to another, similar to U.S. phone number portability regulations enacted years ago. Wealth register for Wealth Management Here is another example from Heirwealth, which, by partnering with Envestnet, helps families streamline the intergenerational transfer of wealth. This partnership removes the need to search for papers and accounts or go through a discovery process of critical information during the stressful time following a parent's passing. 2. How Banks and Credit Unions Benefit from Open Banking Acquiring new customers Many organizations view Open Banking as a strategic opportunity to acquire new customers. Central to this strategy is the deployment of digital engagement tools that are efficient, simple, and intuitively designed. Fortunately, with access to transactional and statement data, organizations can now gain deeper insights into a customer’s financial status. This enhanced data can be leveraged to identify the most suitable customers for onboarding. Transactional data reveals extensive information about a customer’s financial behavior. Access to this detailed behavioral data allows organizations to segment and prioritize customers based on their risk, lifetime value, and growth potential. It's crucial to consider how you can enhance the insights you already possess to better align the risk profiles of targeted customer segments with your credit risk strategy. Open Banking offers a significant opportunity to revitalize your growth strategies and refine your acquisition processes. Worldwide spend on retail media networks, the catchall term for the advertising sales units of retailers and other companies, will account for 21.6% of all digital ad spending in 2024, up from 15.1% in 2019, according to forecasts from market research company Emarketer.[2] Wall Street Journal April 3rd, 2024. Upsell and cross-sell with personalized customer digital profiles Banks possess substantial brand equity, and as established entities, they are ideally positioned to become advocates of Open Banking. But what’s the rationale behind this? Traditionally, many banks have relied on a limited scope of data, focusing primarily on demographic and personal preferences. However, harnessing the transactional data within your systems opens up new avenues for analyzing customer behavior. This analysis can help identify the most advantageous data partnerships for both the bank and its customers. For instance, transactional data can pinpoint frequently purchased items, enabling banks to offer targeted discounts in collaboration with retail partners. Such initiatives not only enhance service personalization but also strengthen customer relationships by showing a deep understanding of their needs. This strategy not only improves customer satisfaction but also enhances loyalty and growth potential. Balance multi-channel touchpoints As the digital landscape continues to expand, some customers still prefer face-to-face interactions, especially when it comes to seeking financial advice. Therefore, it's crucial that multi-channel touchpoints are integrated seamlessly. Open Banking offers a unique opportunity to provide a service that allows customers to transfer their data seamlessly across various channels. Consequently, this enables you to deliver a consistent and smooth customer experience, ensuring reliable verification across all points of contact. Reducing debt Open Banking offers a strategic opportunity to tackle some of the issues related to debt, presenting a unique chance for customers to minimize their risk of falling behind on payments. By accessing transactional data, you gain a deeper understanding of your customers' financial situations. This insight allows financial institutions to collaborate with them in managing their finances more effectively, offering value-added services like alerts and support for those facing financial difficulties, with a comprehensive view of their entire financial portfolio. KYC (Know Your Customer) and onboarding for Wealth Management Open Banking's ability to access personal banking data offers wealth management services, particularly digital platforms, a chance to streamline their onboarding process. Essential information required from a new user—such as their name, address, monthly expenses, and available funds—can be instantly retrieved via an API call to their bank account. This convenience spares users the hassle of manually inputting their data. Such enhancements not only increase conversion rates and reduce errors but also ensure a smoother onboarding experience. In a competitive market, the simplicity and ease of account creation are crucial. The easier it is for customers to sign up, the more likely they are to complete the process and recommend the service to others. The "shoebox syndrome" of Financial advisers Effective wealth management begins with the discovery phase, where advisors gather detailed client information to devise optimal financial strategies. Known by financial advisers as the 'shoebox syndrome', refereeing when a clients forgot to bring their financial documents they left under the bed in a shoebox, current onboarding and discovery procedures are predominantly manual and burdensome, consuming time that could be better spent on meaningful discussions that lead to superior advice. More critically, the static nature of these processes restricts advisors' capacity to offer proactive guidance as clients' circumstances evolve. Utilizing APIs to access banking and investment data would transform the data gathering process for both clients and advisors, shifting the discovery phase from a static, one-time event to a dynamic, ongoing process. By continuously analyzing client data, advisors can proactively engage in meaningful conversations whenever there are significant changes in a client’s portfolio or income. This approach not only enhances the quality of advice given but also leads to more responsive and effective investment strategies. Credit card segmentation Credit card offerings are becoming increasingly diverse, with a range of additional perks and services that make choosing the right card challenging for prospective customers, especially when they have to compare options across different financial institutions. This process often feels disconnected and isolating, leaving customers poorly informed as they try to select the most suitable card. Open Banking allows issuers to pull together a customer's past transaction history to gain a comprehensive view of their spending behaviors. With this information, issuers can tailor the card selection process, recommending cards that best match the customer’s spending patterns and lifestyle preferences. Additionally, issuers can minimize risk related to storing credentials by adopting a one-time data sharing model. By providing a personalized and data-driven card selection process right from the first interaction, financial institutions can streamline the onboarding process and enhance customer conversion rates. This approach not only simplifies the application process by leveraging income and other relevant data points but also enhances customer satisfaction and offers valuable insights for future product innovations. Helping customer assessing their retirements capability Customers often feel overwhelmed and uncertain about their readiness for retirement, a feeling that intensifies when their retirement funds are dispersed across various sources such as public pensions, private pensions, and individual savings and investment products. This complexity can deter many customers, especially those without access to financial advisors, from initiating their retirement planning. Open Banking provides financial institutions with the ability to develop a customer-facing digital tool that consolidates existing banking data to identify significant gaps in retirement planning. This tool can also be used by internal advisors to foster more informed and advice-driven conversations during discovery and financial planning sessions with clients. This tool enables financial institutions to expand their prospective client base at the top of the funnel by encouraging users to evaluate their retirement readiness. For financial planners or self-directed investment services, it serves as a powerful new mechanism for customer acquisition, enhancing the efficiency of the onboarding process through the generation of prefilled documents and facilitating more tailored discussions. According to Nielsen, credit card fees totaled $126 billion in the US in 2022, marking a 20% increase from the previous year and doubling since 2013. Credit card swipes have now become the third highest cost for restaurants, following labor and food expenses. Credit card refinancing Many consumers maintain balances on their credit cards, despite it being one of the most costly methods of borrowing. Typically, financing options are restricted by exclusive agreements with merchants, limiting their availability and impacting credit scores. With access to credit card purchase history, lenders can offer installment-based refinancing for purchases made with any merchant or card. This data allows lenders to quickly evaluate a borrower's creditworthiness and financial capacity, enabling them to pay off the card balance immediately. This approach not only makes borrowing options more accessible but also assists consumers in avoiding high interest charges and fosters a better understanding of their true financial affordability based on cash flow. Consumer cash flow management While consumers generally recognize the importance of managing their finances, many still face financial anxiety. This anxiety is often driven by the complexity of managing their liquidity and the extensive effort required to balance cash flow across spending, borrowing, and saving. Open Banking can simplify financial management by consolidating transaction accounts to offer a comprehensive view of all money inflows and outflows. Consumers can opt to automatically allocate funds to cover all commitments—from utility to credit card bills—coordinated with their paycheck cycles. This means consumers can focus on just one figure: their remaining spendable balance, ensuring they never miss a payment. Additionally, financial institutions can leverage this data to identify and suggest ways for customers to save money by switching to more cost-effective financial products and services with recurring payments. 3. How Corporate Banking Benefit Real-time cash management Real-Time Payments (RTP) from The Clearing House, launched in 2017, and from the Fed with FedNow since last year, offer many advantages for corporations. Corporate treasurers expect to manage their cash and accounts in real-time from anywhere, with global visibility across all their accounts and the countries where they do business. Open API connectivity enables the aggregation of real-time cash positions. The integration with ERP and Treasury Management Systems provides a centralized view of figures from all bank accounts, offering immediate and unprecedented visibility of cash flows. Practically, this eliminates the need to log into multiple banking portals or systems to download and consolidate bank statements and transaction data. Additionally, it removes the constraint of cut-off times for intraday statements, allowing data to be reconciled instantly as it arrives in your chosen system. 4. The case for Hyper-Personalization: AI to the rescue By now, you can how Open Banking and Open Finance can help financial organizations to create a digital profile of their customers. Combining Open Banking with AI will enable them to automate many processes at scale. Here are two examples: Travel & hospitality Like retail, the travel and hospitality sector is defined by distinct customer needs throughout the buying journey—from researching options online to preparing for the trip and sharing experiences. For instance, personalization is often missing in travel and hospitality booking platforms, particularly online, where the landscape is highly fragmented with little coordination between platforms. As a result, travelers frequently have to interact with multiple providers to organize different stages of their journeys, repeatedly inputting the same details. Another significant inconvenience is the hotel check-in process. After a long journey, travelers often face long lines, only to have to provide numerous details at the front desk. Similarly, checkout can be slow and tedious, with delays in receiving invoices and receipts. These processes are also labor-intensive for hotels, which must manage each guest's administrative needs individually. "Open banking offers solutions to many of these challenges. For example, payment innovations through API-based services can reduce merchant payment costs and minimize fraud risk. Identification can be verified through bank account ownership, while customer transaction data can be used to tailor recommendations and enhance personalization, benefiting both businesses and customers."[3]. BCG & Klarna Kosma. Auto dealership Similar to the Travel & hospitality example, Open banking can streamline various business processes, allowing dealerships to present personalized offers to customers before they even search for a new car, improving conversion rates. It simplifies customer identification and automates credit scoring, reducing approval times and lowering default and fraud rates. This technology also enables more precise credit assessments, which allow dealerships and OEM financial services to provide pre-approved offers with attractive financing options tailored to the customer's financial situation, enhancing online interaction and purchase opportunities. 5. Conclusion As you can see, there is no shortage of use cases for open banking and finance. Once screen scraping is eliminated due to the CFPB final ruling, secure permission-based data sharing will open the door to a flood of new, streamlined digital processes across all industries. This will forever change the way consumers manage their money, accounts, and personal data. The same applies to commercial banking and other financial segments. #openbanking #openfinance #openbankingusecases [1] https://www.finextra.com/blogposting/24575/embracing-open-banking-for-small-banks [2] https://www.wsj.com/articles/chase-bank-to-let-advertisers-target-customers-based-on-spending-data-275f8226?st [3] https://media-publications.bcg.com/open-banking-next-wave-of-use-cases.pdf

This Part 3 of this four-part blog series explains the current open banking situation in Canada. Part 1: Unlocking the Future of Finance: Navigating the Rise of Open Banking in America Part 2: Breaking Down the CFPB’s Announcement Part 3: What about Canada? Part 4: Open Banking Use Cases: Show me the Money Like the U.S., Open Banking has been a topic of interest in Canada since 2018. The Canadian financial and tech communities widely agree that Canada should have established a regulatory framework by now, ideally before the U.S. The lack of such an announcement last year was a bit of disappointment for many involved in the global open finance movement. However, recent developments are sparking optimism within the Canadian financial ecosystem, suggesting that significant progress may be on the horizon. Something is happening. “The Department of Finance will advance the work required to stand up a Canadian framework governing consumer-driven banking, with the goal of adopting legislation and fully implementing the necessary governance framework by 2025[1].” Echoing the U.S. CFPB's steps, Canada's 2023 Fall Economic Statement introduces a consumer-driven banking policy (a term for open banking), focusing on secure, consumer-consented data sharing to improve financial outcomes and inclusivity. It aims to empower Canadians by removing data access fees and addressing risks like screen scraping. Similar to the expected final CFPB ruling in the US, Canada is also moving to prohibit screen scraping. Currently, about 9 million Canadians share their financial data by giving confidential banking credentials to third-party services. This method, known as screen scraping, poses security, liability, and privacy risks. Moreover, the extensive data extraction requires significant computing resources, often burdening financial institutions with limited control over this practice. They could block such access to account aggregators to avoid this, but at the risk of reducing customer satisfaction, which they typically avoid. March 24, 2024 and April 16, 2024: Key Open Banking Milestones? On March 20, 2024[2], Canada passed an important milestone aimed at increasing competition in the banking sector. The bill, known as Bill 365, successfully passed its second reading in the House of Commons. The policy envisions a framework that includes governance, scope, accreditation, common rules, and technical standards to ensure safety, consumer protection, and economic growth. Legislation planned for Budget 2024 will detail a phased implementation and oversight structure. The federal government is expected to announce a legislative framework for ‘open banking’ in its 2024 budget, to be released on April 16 of this year. With open banking becoming a reality in Canada, credit must also be given to Abraham Tachjian, appointed by the government to lead the crucial final consultations, concluding his mission in 2023. “When these rules come out, I don’t think it will catch anyone off guard, because it will be based on every single conversation that we’ve had,” said Abraham Tachjian in a in a recent interview with The Logic[3]. Over 50 countries have adopted various forms of open banking through regulations, market-driven initiatives, or a hybrid approach. The anticipated implementation in North America—2024 for the U.S. and shortly thereafter in Canada—marks a significant achievement and milestone that the financial community should celebrate. As Colin Deacon, Independent Senator, Senate of Canada, who has been a driving force behind this movement, recently said: "Canadians desperately need #OpenBanking (OB), now called called #ConsumerDrivenBanking, so that they can begin to use their financial data for their benefit, not their bank’s. I challenge anyone to find a public policy that’s been as robustly studied as OB.[4]" source: https://www.konsentus.com/open-banking-world-map-feb-2023/ Key Takeaways: Canada is poised to embrace open banking, with both industry leaders and government officials recognizing its potential benefits. The collaborative approach in Canada, learning from global experiences, is expected to lead to a well-considered implementation strategy. Open banking will transition financial institutions into API providers by replacing screen scraping with secure APIs. This shift, while not new, marks a significant change, especially for mid-sized and small banks and credit unions, as they adapt to providing secure APIs and implementing consent management to adhere to data permission regulations. One of the premises of open banking is to enable interoperability among financial institutions, based on a common, shared, and open standard. With FDX (Financial Data Exchange) in the US having reached the status of a de facto standard, let's hope the US and Canada will agree to use the same one. In my final blog post next week, I will delve into various use cases of open banking and finance, exploring how they will change the way consumers handle their finances. And more. Stay tuned! #openbankin #Consumerdrivenbanking #openfinance [1] https://www.canada.ca/en/department-finance/programs/financial-sector-policy/open-banking-implementation/2023-fes-policy-statement-consumer-driven-banking.html [2] https://www.quintenews.com/2024/03/20/327499/ [3] https://thelogic.co/news/the-interview/open-banking-czar-abraham-tachjian-exit-interview/ [4] https://www.linkedin.com/feed/update/urn:li:activity:7179211627659939841/

If you're not deeply involved in the financial industry, you might not have heard of Open Banking. Yet, as a consumer of financial products, the upcoming changes in America will significantly impact how you manage your money and the financial ecosystem at large. Whether you're new to open banking or seeking clarity on the topic, this four-part blog series will guide you through understanding its implications. Part 1: Unlocking the Future: Navigating the Rise of Open Banking in America Part 2: Breaking Down the October 2023 CFPB’s Announcement for the U.S. Part 3: What about Canada? Part 4: Open Banking Use Cases: Show me the Money What is Open Banking and How it started? In his remarks at the FDX[1] Global Summit on April 19, 2023, the acting Comptroller of the Currency[2]  Michael J. Hsu gave this definition of open banking: “open banking is understood to be about enabling consumer-permissioned sharing of financial data with third parties to empower consumers, foster competition, and expand financial inclusion.” Although accurate, this definition might be too esoteric for a general audience. But before we explore its meaning further, let's review how this global movement began. How and where Open Banking started? Open Banking originated as part of a broader global movement towards financial transparency, innovation, and consumer choice, with different regions adopting the concept in various forms and at different times. The movement started with regulatory initiatives in the UK and the European Union (EU), which were among the pioneers in formalizing the concept. United Kingdom (UK) In the UK, Open Banking was officially initiated as a result of a review by the Competition and Markets Authority (CMA) in 2016. The review found that older, larger banks were not having to compete hard enough for customers’ business, and smaller and newer banks found it difficult to grow. To address these issues and to foster a more competitive and innovative banking industry, the CMA mandated the nine largest UK banks (often referred to as the CMA9) to allow licensed startups and other financial institutions access to their data, down to the level of transaction-account transactions, with customer consent. Note that this notion of customer consent is going to play a big role in the upcoming regulation in the US. We will get back to this later. European Union (EU) Around the same time, the European Union was implementing the Revised Payment Services Directive known as PSD2, which came into effect in January 2018. PSD2 required banks to open up their payment infrastructure and customer data assets to third parties, with customer consent, to drive competition and innovation in the financial services industry. This directive applied to the 27 EU member states and was a significant step towards Open Banking in Europe. On June 28, 2023, the European Commission published its proposal for the Third Payment Services Directive (PSD3), which aims at giving a second life to its initoi9al PSD2 directive as part of the EU’s Digital Agenda, which aims to strengthen Europe’s competitiveness, innovation, and digital sovereignty. These initiatives in the UK and EU are considered some of the earliest and most influential Open Banking regulations, setting a precedent for other countries and regions to follow. Since then, Open Banking has been gaining momentum worldwide, with countries like Australia, Canada, USA and Brazil, among others, exploring or implementing similar frameworks. As a result, Open Banking has been adopted by various financial institutions beyond traditional banking, leading to the broader concept known as Open Finance. The global trend towards Open Banking and Open Finance continues to evolve, and is unstoppable, with each region tailoring the concept to fit its unique regulatory, economic, and technological landscape. So, what is Open Banking exactly? Open Banking is a financial services concept that promotes the use of open APIs (the ubiquitous technology that fuels every digital data exchange in our today’s world) to enable third-party developers to build applications and services around financial institutions. It represents a shift from a closed banking model, where a customer's financial information is held exclusively by their bank, to an open model that allows this information to be securely shared with authorized third-party providers, with the customer's consent. Source: Financial Data Exchange: 8-15-2023 ‘Getting Started with Open Banking’ Basically, as a consumer, you’re allowing a third party to access your financial data, with your permission (hence the term ‘consumer-permissioned sharing of financial data’) to help facilitate your financial transactions. As a financial institution, open banking enables more opportunities for them to work with fintech companies, focus on innovation and create new products faster that benefit everyone in the ecosystem. However, as this series will show, Open Banking has significant implications for banking infrastructure, security, and legal frameworks, as it essentially transforms banks into API providers. Why? This approach facilitates a more integrated and seamless financial ecosystem, encouraging innovation, competition, and improved customer service. It enables consumers and businesses to have greater control over their financial data, allowing them to access a wider range of services, such as more personalized banking, better financial management tools, easier comparison of financial products, and more efficient ways to conduct transactions. Source: PYMNTS What’s Cooking in the US? On October 2022 at Money 20/20, CFPB’’s Director Chopra’s made a landmark announcement[3] by kicking-off the process to activate a dormant authority under Section 1033 of the Consumer Financial Protection Act that will accelerate the shift towards Open Banking. A year later, on October 19, 2023, CFPB further announced the release of a proposed rule[4] requiring U.S. financial firms such as banks and credit unions that offer transaction accounts – like checking accounts, prepaid cards, credit cards, and digital wallets – to give consumers access to their personal financial data at no charge, so it can be shared with another provider. The rule is aimed at leveling the playing field, empowering smaller financial institutions to better compete and giving consumers more freedom and access to new services. In my next blog post, I'll break down the October 2023 announcement, discussing what it entails and its key takeaways. Stay tuned! [1] Financial Data Exchange (FDX), a non-profit organization dedicated to unifying the financial industry around a common standard for the secure and convenient access of permissioned consumer and business financial data. [2] Office of the Comptroller of the Currency (OCC) supervises and regulates national banks and federal savings in the US. [3] https://www.consumerfinance.gov/about-us/newsroom/director-chopra-prepared-remarks-at-money-20-20/ [4] https://files.consumerfinance.gov/f/documents/cfpb-1033-nprm-reg-text-with-1001_2023-10.pdf

Part 1: Unlocking the Future of Finance: Navigating the Rise of Open Banking in America Part 2: Breaking Down the CFPB’s Announcement Part 3: What about Canada? Part 4: Open Banking Use Cases: Show me the Money Part 1 of this four-part blog series explained what is Open Banking and how it started. Part 2 focuses on the announcement by the U.S. Consumer Financial Services Bureau (CFPB) to activate a dormant authority under Section 1033 of the Consumer Financial Protection Act that will accelerate the shift towards open banking. On October 19, 2023, CFPB announced the release of a proposed rule[1] requiring U.S. financial firms such as banks and credit unions that offer transaction accounts – like checking accounts, prepaid cards, credit cards, and digital wallets – to give consumers access to their personal financial data at no charge, so it can be shared with another provider. The rule is aimed at leveling the playing field, empowering smaller financial institutions to better compete and giving consumers more freedom and access to new services. Overview: The document, that is 80-pages long, from the Federal Register, dated October 31, 2023, details a proposed rule by the Consumer Financial Protection Bureau (CFPB) regarding personal financial data rights. This rule, under the Consumer Financial Protection Act of 2010 (CFPA), aims to regulate the handling of consumers' financial data by both depository and non=depository entities. Key points include: 1. Mandatory Data Availability: The rule would require entities to provide consumers and authorized third parties with access to certain transaction and account data. 2. Third-Party Obligations: It establishes obligations for third parties accessing consumer data, emphasizing privacy protections. 3. Depository and Non-depository Entities' Role: The rule mandates these entities to provide access to consumers' transaction and account data. This includes banks, credit unions, and non-banking financial companies. 4. Privacy and Data Security: The proposal places a strong emphasis on protecting the privacy of consumer data. It requires third parties to adhere to stringent data security and privacy standards. 5. Standards for Data Access: The rule aims to set clear standards for how data access is provided, ensuring consistency and reliability in the way consumer financial data is handled. The document also discusses the background and challenges in the open banking system, the legal authority for the rule, and its potential impacts. It includes a detailed analysis of the proposed rule's benefits and costs, its effects on small depository institutions and credit unions, and its impact on consumers in rural areas. Key Takeaways 1. Enhanced Consumer Control: The rule empowers consumers by giving them more control over their financial data. This could lead to better financial management tools and services tailored to individual needs. For instance, the rule will enable consumer’s financial data portability to easily move their bill pay data from one bank to another, similar to U.S. phone number portability regulations enacted years ago. 2. Industry Standardization: One of the key promises of Open Banking is to establish an open, shared standard to facilitate seamless interoperability. Although CFPB will not take side for a specific standard, currently, in the US, a de facto standard exists, largely due to the efforts of the non-profit Financial Data Exchange (FDX) organization, which emerged from collaboration within the banking ecosystem. Various industries have historically been hindered by a lack of interoperability, which has served as a barrier to adoption, costing millions. Consider the early days of cell phones and the challenges of international travel, not to mention the associated high fees. Nowadays, we often take for granted standards like TCP/IP, Wi-Fi, Bluetooth, HTTP, and HTML, among others. Imagine a world without. 3. Potential for Innovation: The rule could spur innovation in financial services, as fintech companies and other third parties will have standardized access to consumer data, enabling the development of new tools and services. 4. Data Security Concerns: With the increased sharing of financial data, there will be a heightened focus on data security and the prevention of data breaches. Today, such consumer data access is enabled via screen scraping, an unsecure method of sharing data with a third party. The bureau will therefore require financial institutions to use APIs to share data instead of compelling customers to give out their account credentials. 5. Impact on Financial Institutions: Banks and other financial institutions will need to invest in technology, processes, and education to adapt to and comply with new open banking requirements. This could lead to significant changes in their business models too. Technological advancements will include replacing screen scraping with secure FDX APIs, creating modern portals for API publication in discoverable marketplaces, managing consent, and more. This proposed rule marks a significant step in regulating the use of personal financial data, reflecting the growing importance of data privacy and security in the digital age. It also highlights the CFPB's role in shaping the future of financial services through regulatory measures. Proposed Timeline and Compliance Dates Implementation Timeline: After the closure of the comment period on December 29, 2023, the CFPB will review the feedback and finalize the rule. The timeline for implementation will be outlined in the final rule, which is not specified in the document. A data provider must comply with §§ 1033.201 and 1033.301 beginning on: (1) [Approximately six months after the date of publication of the final rule in the Federal Register], for depository institution data providers that hold at least $500 billion in total assets and non-depository institution data providers that generated at least $10 billion in revenue in the preceding calendar year or are projected to generate at least $10 billion in revenue in the current calendar year. (2) [Approximately one year after the date of publication of the final rule in the Federal Register], for data providers that are: (1) Depository institutions that hold at least $50 billion in total assets but less than $500 billion in total assets; or (2) Non-depository institutions that generated less than $10 billion in revenue in the preceding calendar year and are projected to generate less than $10 billion in revenue in the current calendar year. (3) [Approximately two and a half years after the date of publication of the final rule in the Federal Register], for depository institutions that hold at least $850 million in total assets but less than $50 billion in total assets. (4) [Approximately four years after the date of publication of the final rule in the Federal Register], for depository institutions that hold less than $850 million in total assets. However, it would be prudent for financial institutions in the last two segments not to delay embracing open banking compliance. Waiting risks being outpaced and becoming obsolete by early adopters who gain a first-mover advantage. In my next blog post, I'll explore the path and readiness of Canada for open banking, given that the CFPB's jurisdiction is limited to the U.S. Stay tuned! [1] https://files.consumerfinance.gov/f/documents/cfpb-1033-nprm-reg-text-with-1001_2023-10.pdf

Ever wondered how to better motivate your teams or what triggers your own motivation? Executive Summary Research shows that motivation can be significantly enhanced by providing individuals with the opportunity to make their own choices, thereby fostering a sense of autonomy and self-determination. When tasks are framed as choices rather than directives, individuals feel more in control, which in turn, motivates them to tackle challenges more eagerly. Self-motivation, on the other hand, is closely linked to personal values and goals. A compelling way to enhance self-motivation is by constantly reminding ourselves of the 'why' behind our actions. To trigger and sustain motivation, it is essential to take deliberate actions that reinforce our sense of control and purpose. Simple acts, such as making a proactive choice in how we approach a task or consciously linking a task to a larger personal goal, can ignite motivation. The act of choosing not only asserts control but also connects us with our deeper motivations, making even mundane tasks feel significant. As leaders, we should empower our teams by providing them with opportunities to make choices, thus fostering a sense of autonomy and self-determination. For example, when your sales team is outlining their strategic account plan for the year, encourage them to define their own OKRs, while you offer guidance to ensure these are relevant and aligned with the organization's objectives. As individuals, by asserting control over our choices and environment, we can cultivate self-motivation. For instance, if you're struggling to find the motivation for a certain task, remind yourself of the 'why' behind it. If you're procrastinating over scheduling a challenging meeting, decide in advance where it will take place. The greater your sense of control over these tasks or decisions, the more you'll foster self-motivation. In summary, motivation is deeply intertwined with a sense of autonomy, purpose, and support. By creating environments that nurture these elements and adopting practices that remind us of our larger goals, we can enhance both our own motivation and that of those around us. Dig Deeper Motivation is a complex and dynamic process, influenced by various psychological factors and external conditions. It's not merely an innate characteristic that some people possess and others lack; rather, it can be cultivated and triggered through specific strategies and environmental cues. The first step in creating drive is giving people opportunities to make choices that provide them with a sense of autonomy and self-determination. In experiments, people are more motivated to complete difficult tasks when those chores are presented as decisions rather than commands. Motivation is triggered by making choices that demonstrate to ourselves that we are in control. The specific choice we make matters less than the assertion of control. It’s this feeling of self-determination that gets us going. Employees work smarter and better when they believe they have more decision- making authority and when they believe their colleagues are committed to their success. A sense of control can fuel motivation, but for that drive to produce insights and innovations, people need to know their suggestions won’t be ignored, that their mistakes won’t be held against them. And they need to know that everyone else has their back. Lessons from the Marine Corps “Self-motivation becomes easier when we see our choices as affirmations of our deeper values and goals”, says Charles Duhigg in his enlighten book “Smarter Faster Better.[1]” He further explains “That’s why Marine Corps recruits ask each other “why”: “Why are you climbing this mountain?”, “Why are you missing the birth of your daughter?”, “Why are you cleaning a mess hall, or doing push-ups, or running onto a battlefield when there are safer, easier ways to live?” Forcing ourselves to explain why we are doing something helps us remember that this chore is a step along a longer path, and that by choosing to take that journey, we are getting closer to more meaningful objectives.” Actional Insights Charles Duhigg recommends these practical exercises to generate motivation: "Make a choice that puts you in control. If you’re replying to emails, write an initial sentence that expresses an opinion or decision. If you need to have a hard conversation, decide where it will occur ahead of time. The specific choice itself matters less in sparking motivation than the assertion of control." "Figure out how this task is connected to something you care about. Explain to yourself why this chore will help you get closer to a meaningful goal. Explain why this matters—and then, you’ll find it easier to start." Here's a deeper dive into how motivation is triggered and ways to generate it: Understanding the Mechanisms Behind Motivation 1. Autonomy and Control: One of the primary drivers of motivation is the feeling of autonomy—the sense that you are in control of your actions and decisions. When individuals feel they have a choice in how they do their work or tackle a problem, they're more likely to be engaged and motivated. This sense of autonomy activates the reward centers in the brain, releasing dopamine, a neurotransmitter associated with pleasure and satisfaction. 2. Competence and Mastery: The desire to improve, master new skills, and overcome challenges can also trigger motivation. As people recognize their own competence and growth in a particular area, their intrinsic motivation tends to increase. This is often referred to as the 'mastery orientation' and is a powerful motivator because it taps into the innate human drive to improve and excel. 3. Relatedness and Purpose: Feeling connected to others and believing that one's actions have a broader purpose or contribute to a larger cause can significantly boost motivation. When individuals see their work as meaningful and know that it impacts others positively, they're more likely to be motivated to continue and excel in their efforts. Generating Motivation 1. Setting Clear, Achievable Goals: Goals provide direction and a sense of purpose. Setting clear, achievable goals can help in creating a roadmap towards what you want to achieve, thereby generating motivation. However, it's crucial to balance these with 'stretch goals'—ambitious goals that push you beyond your comfort zone, to inspire and motivate. 2. Providing Choice and Encouraging Autonomy: Allowing individuals the freedom to choose how they approach a task or solve a problem can significantly enhance motivation. This could be as simple as allowing employees to set their own schedules within reason or letting students choose the topic of a project within certain guidelines. 3. Building Competence through Feedback and Challenges: Providing constructive feedback and setting up incremental challenges can help individuals build competence and mastery over time. This, in turn, boosts their confidence and motivation to take on more significant challenges. It's important that these challenges are matched to the individual's current skill level to avoid overwhelming them and causing demotivation. 4. Creating Connections and Highlighting Purpose: Helping individuals see the bigger picture and how their work contributes to broader goals or impacts others can be a strong motivator. This could involve regularly sharing success stories within an organization, highlighting the impact of work on clients or the community, or connecting individual achievements to team or organizational goals. 5. Encouraging Small Wins: Breaking down larger tasks or goals into smaller, manageable components and celebrating these "small wins" can provide a continuous stream of motivation. These achievements, though small, can create a positive feedback loop that keeps individuals motivated over the long term. 6. Cultivating a Growth Mindset: Encouraging a growth mindset—the belief that abilities and intelligence can be developed through dedication and hard work—can significantly enhance motivation. When individuals believe that effort leads to growth, they're more likely to embrace challenges and persist in the face of setbacks. By understanding and leveraging these mechanisms and strategies, individuals and organizations can effectively trigger and sustain motivation, leading to improved performance, satisfaction, and overall well-being. If you need help improving team performance and coaching, schedule a call or Contact me at lvanhuffel@croforscale.com [1] Smarter Faster Better” Charles Duhigg – Random House.

From intuition-based to Data-Driven Qualification This blog focuses on exploring the benefits of adopting a qualification framework like MEDDPICC. It includes practical tips and recommendations for effective implementation, along with a curated list of AI-powered promising tools designed to automate the process and provide insightful analytics. *** According to a recent benchmark published by Ebsta[1] and Pavilion, after analyzing $54Bn in revenue and 4.2 million opportunities, “85% of opportunities are poorly qualified.” This figure is so substantial that it should prompt a moment of reflection for any sales and marketing professionals. How is this possible? In July 2012, Mark Roberge from HubSpot published an article in the Harvard Business Review[2] about “The Science of Building a Scalable Sales Team” that has resonated with me ever since. At the time, he had joined the software company —a then relatively unknown organization—as the head of sales, despite having never managed a sales team before. Rather than relying on non-existent prior experience, he leveraged his MIT engineering background to adopt a scientific approach, developing a quantitative analysis to shift from gut-feel decisions to a more data-driven strategy. This method, applied across hiring, training, lead generation, and more, spurred significant growth for his company. The team expanded to 200 employees and secured 7,000 new customers, propelling HubSpot to the #33 spot on the Inc. 500 List of Fastest Growing Companies in America at that time. The transformation of sales from an intuition-based practice to a data-driven science, focusing on scalable, predictable revenue growth, represents the core value and objective of methodologies like MEDDPICC. In this blog, I've chosen MEDDPICC as an example due to its widespread adoption. However, my primary focus here is on the advantages of employing a qualifying methodology in general, rather than on the specifics of MEDDPICC itself, although I will explore its details later on. Discovery, Qualification or Sales methodology? Firstly, it's important to clarify that MEDDPICC is not a sales methodology like Challenger Sale or Force Management; rather, it's a qualification framework. It offers a structured and uniform approach for sales teams to thoroughly discover and qualify potential deals in the pipeline, ensuring a dependable, more data-driven  method for forecasting. That's the essence of it! Qualifying is a Journey, not a Destination. Traditionally, sales organizations have made a distinction between the Discovery phase, which precedes the Qualification phase. I do not. In my opinion, and particularly in the case of complex sales, you are always in a qualifying mindset, and you keep discovering essential information you need at the different stages of your sales cycle. If you are an SDR or BDR, sure, you are in discovery mode, but you also qualify your conversation to decide whether it is worth proceeding to the next step or not. That is why SQL or MQL are called S/M Qualified Leads. Once sellers take over, they decide to accept or reject the xQL, which is often called SAL for Sales Accepted Lead. That's qualifying too. Ultimately, sellers transition their SAL into opportunities in their CRM. At that very specific milestone, you could declare that your qualification is done. Yes, this is an important moment in the life of your deal, but you will keep discovering and qualifying further your opportunity to uncover more critical information needed to close that deal, or walk away. The criteria your organization uses to decide that a lead is 'qualified' to move to the opportunity stage is very important, and it will depend on your business, whether you are in a transactional, short-sales cycle business or dealing with complex deals with long sales cycles. As you gather more data points into your CRM, a framework like MEDDPICC can help you refine your criteria for decision-making. Of course, there are many reasons you might lose a deal that aren't apparent in the early qualification process, with indecision being the largest factor in lost deals today in enterprise sales. This is why sellers should continuously qualify their opportunities, even as they progress through the sales cycle. Walking away from a deal after investing months of time and resources is a tough pill to swallow. We've all made the mistake of ending up empty-handed. Guilty as charged. However, deals are not always lost forever. Sometimes, customers need to pause for valid reasons and may restart the process months later. In such cases, it's wise to return the opportunity to the nurturing phase and check back periodically, but use this time to concentrate your efforts on your most promising deals. Don’t Rush If you are a seller reading this blog, you will appreciate what follows. Your organization will pressure you to create a minimum number of opportunities per week or month. Your boss has a KPI for this, and so does the boss above them. Your natural instinct might urge you to skip some important steps in your qualification review to meet that KPI number and please your boss at your next QBR. Don’t! This is how 'crappy' opportunities end up in the forecast. Resist the pressure and choose quality over quantity. You will be rewarded with consistency, as people will recognize the reliability of what you include in your forecast. Disqualifying is Qualifying Since sales is not an exact science, the main objective is to eliminate as much subjectivity as possible from the qualification process. This helps in disqualifying opportunities early enough so that the sales organization doesn't waste resources, time, and money on deals that are unlikely to close. In every study on the attributes of top sellers, one characteristic that consistently appears is their ability to disqualify opportunities early. This allows them to maximize their time and resources on prospects with the highest likelihood of closing. According to the benchmark published by Ebsta[1] that I mentioned earlier, “top performers are 366% more likely to close an opportunity at the ‘Discovery’ stage", and “324% more likely to win a deal if MEDDPICC is completed by the 'Solution Presented' stage.” Instead of creating opportunities based on hope, they meticulously use a method like MEDDDPICC to disqualify them early, ensuring their time is not wasted on businesses that are unlikely to close. Develop your Intellectual Curiosity I am often surprised by the lack of curiosity among sellers or even sales leadership. Frequently, sellers are so pleased to have uncovered a solid prospect that they take much of what they hear from the customer at face value. Why does a customer decide they want to buy a product like yours? Did they wake up that morning thinking, 'Hey, I need to buy something!'? And why now? Customers often describe the problem they want to solve by outlining the solution they think they need. If you do not delve deep into the problem, peeling back the layers to its core and getting down to the root cause, you risk missing critical information, weakening your position and diminishing your chances of taking control of the sales cycle. In his book "The Qualified Sales Leader - Proven lessons from a five-time CRO" by John McMahon, the author singled out 3 “why?” questions: 1. Why do they have to buy? This question aims to uncover the underlying reason or problem that necessitates a purchase. It's about understanding the prospect's pain points, challenges, or goals that your product or service can address. 2. Why do they have to buy from us? This question focuses on differentiating your offering from competitors. It's about identifying what unique value or solution your product or service provides that aligns with the prospect's specific needs, making your solution the best fit for them. 3. Why do they have to buy now? This question seeks to establish the urgency of the purchase. It involves understanding any time-sensitive factors that might be influencing the prospect's decision to buy, such as end-of-quarter deadlines, budget cycles, or escalating problems that need immediate resolution. Be curious, keep asking “why?”. Make a habit to develop your intellectual curiosity. Be that kid that keeps asking questions about anything. Just one more note before we delve into MEDDPICC. As is often the case with well-intentioned initiatives, they start with enthusiasm but can falter due to a lack of discipline. The challenging part is execution; to succeed, you will need to develop a culture of fanatical discipline. So, what is MEDDPICC? As previously mentioned, it is a qualifying framework, a method better suited for complex enterprise deals. However, they are a few variations like MEDDIC, which may be used for more transactional activities, such as SPICE for SaaS vendors with short sales cycles and low-ticket items. Use the method that is best suited for your business, but make sure to use one! MEDDPICC is based on a pragmatic checklist and subsequent actions items providing a consistent and uniform language for evaluation across the organization. MEDDPICC stands for: M for metrics that are the quantifiable measures of value that your solution can provide. E for Economic Buyer, the person(s) with the overall authority in the buying decision. D(p) for Decision Process -the series of steps that form a process of which the buyer will follow to make a decision. D(c) for Decision Criteria -the various criteria your buyer will use to select your solution. P for paper Process -the series of steps that follow the Decision Process your buyer will follow up to contract signature. I for Implicated Pain -means you and the customer have identified, indicated and implicated and agreed upon the pain your solution solves for your customer. In plain English, this means: (1) you have identified pains; (2) you have Indicated the cost of the pain(s) to you customers and (3) you have Implicated the pain onto your customer, and they feel the negative impact it is having upon their business. C for Champion -a person who has power, influence, and subsequently, credibility within the customer’s organization. C for Competition -any person, vendor or initiative competing for the same funds or resources you are. Wait, there is one more! R for Risk -This one is either the result of your own risk assessment, or the cumulative scoring of all the criteria within the MEDDPICC acronym. It highlights the identified risks that could lead to the loss of your deal or result in significant impacts, such as major delays. Tips and recommendations when using MEDDPICC I do not claim to be the ultimate expert on MEDDPICC. However, what follows are actionable insights drawn from countless sales meetings I care to remember, which you can use to make the method work for you. 1. Why there isn't a B for Budget in MEDDPICC? That is usually one of the first questions people ask when starting with the framework. MEDDPICC differs from older methods like BANT that are too simplistic in today's sales complexity. This doesn't imply that budget is irrelevant; rather, it highlights that sales can still be made in its absence. For example, if you are selling a breakthrough technology in an early market, potential customers most likely will not have a designated budget for your product category. However, you can still secure a deal by reallocating budget from another initiative. Conversely, in an established market, verifying the budget is advisable since you'll likely be vying for the same funds as your competitors. In either scenario, budget information is pertinent to the Economic Buyer category of MEDDPICC, but it can also inform the 'Metrics' and 'Competition' sections. 2. About Metrics: A good way to identify these metrics is to envision yourself six months in the deployment of your solution, after winning the deal. How would your customer measure the outcome of your solution? Surprisingly, many customers either fail to clearly identify such metrics or choose not to share them with you. If your organization has developed an ROI model, the best metrics to use are your own, and you should suggest that your customer adopt them for their project. Give it a try; it works! Some adaptations of the MEDDPICC framework expand on the original components to address additional aspects of the sales process, which might introduce variations like "M1" and "M2." These variations are not standard across all interpretations of MEDDPICC, but they could represent different focuses within the Metrics component that may be relevant to your business. For example, "M1" might stand for the primary Metrics that demonstrate the direct impact of the solution (such as ROI, cost savings, revenue growth), while "M2" could represent secondary Metrics that might include indirect benefits (such as efficiency gains, customer satisfaction improvements, risk mitigation). Others, like meddicc.com, use the following classification which I like: M1 are your own metrics representing the business outcome you have delivered to existing customers ─what you typically use in your ROI model; M2 are the metrics personalized and specific to the business case of your customer; and M3 are the metrics you have delivered after the implementation of your solution, and verified with your customers (something many companies do not do nearly enough). M3s will help you to fine-tuned your M1s. 3. About Pain If you are selling in the early market, at the beginning of the Technology Adoption Life Cycle, you will most likely encounter 'latent pains'; meaning your customers may not even be aware that they have such a pain, let alone have a budget allocated for it. This is actually good news! Why? Because it allows you to engage your prospects in a constructive discussion to help them uncover opportunities to increase revenue, reduce costs, or mitigate risks in ways they have themselves not yet recognized. The best conversations are those where your prospects feel they are learning something from you. How severe is the pain? When you visit a doctor, they invariably ask you to rate your pain on a scale from 1 to 10. However, sellers rarely pose this question to their customers. Why not? Pain is subjective. What happens if that pain is not addressed? Do people suffer severe consequences? Do they face job loss, or does nobody care? Is the severity of that pain graded the same across your customer's organization? The same applies to the Compelling Reason you may have identified for your customer to act now, or a deadline by which their project must go live. What happens if they miss that deadline? Do you ever ask this question? Next time, ask your customers (champions, influencers, technical buyers, all of them) to rate the pains you have identified and agreed upon with them from 1 to 10, or to rate the consequences of missing their deadline. Be curious! Their responses might surprise you! A final note on pain: regardless of what you sell, you are expected to be an expert on your solution and the market you are selling into. Therefore, you should be familiar with a set of generic pains experienced by your customers. Arming you with these insights is the responsibility of product marketing. You can begin with these and then validate which ones are most relevant to your prospect. And if your are correct, you will get instant credibility. 4. About Decision Criteria How about ensuring your own criteria are used by your prospects? Collaborate with your product marketing team to create a vendor-neutral document that outlines a set of key capabilities and criteria for selecting a solution like yours, and share it with your prospect. If they are working on an RFP, they might use your document to complement their own version. Of course, ensure that your unique features—those not offered by your competitors—are included. Another effective technique is to link these decision criteria with the metrics you've identified. This will ensure greater consistency in the business case you help your customer develop. If you can suggest compelling ROI and metrics, then the Decision Criteria will likely work in your favor. 5. About the Champion You can categorize your interlocuters into two categories: The Talkers: These individuals do just that: they talk to you but won't take any action on your behalf. They might be pleasant people leading you nowhere, motivated solely by personal gains, or simply blockers who prefer to maintain the status quo. You will not find your Champion in this category. The Mobilizers: These are the individuals who, as the name suggests, mobilize others on your behalf. They are driven by the desire for organizational improvements, or they enjoy sharing ideas and are often sought out by colleagues for their insights. A good way to determine whether you are dealing with a talker or a mobilizer is to ask the person to organize a meeting for you with other stakeholders they can bring in, or to provide information that can only be obtained through active investigation or consultation with colleagues. If they are unable to do so, then you are dealing with a talker, and you may be wasting your time. 6. About your Competition Never bad-mouth your competition. Firstly, you are not paid to talk about them, and doing so is unprofessional. Not the right way to establish credibility and trust. Assuming your organization has done its homework, it should have equipped the sales team with a set of unique differentiators against your competition, which constitute your differentiated value proposition. To test their relevance, ask yourself this question: "So, what?" If you cannot come up with a clear response, chances are your prospect won't be able to either. Who should use MEDDPICC? Begin as early as the discovery process, starting with your SDRs and BDRs/MDRs. If you intend to standardize the way opportunities are evaluated by the sales organization, adopt this standard right from the start. However, there's only so much an SDR/MDR can glean from an early conversation. You should guide your SDRs/BDRs to focus on a list of discovery questions that partially cover MEDDPICC. Strategic Marketing, Field Marketing, and Product Marketing should also be involved. They should determine the ROI metrics to use, identify the personas to sell to, fine-tune your ICP, and develop content targeted at Economic and Technical Buyers. They will benefit from feedback from the field, which can be transformed into valuable insights to refine the marketing message, analyze win/loss ratios, and much more. Go All In, or Don't Do it! If you're going to implement a structured method like MEDDPICC, then commit fully and involve all departments of your organization. Avoid a half-hearted approach, or you won't see much value from your efforts. Build or update your playbook to include MEDDPICC. If you are a seller reading this blog, do yourself a favor: adopt MEDDPICC or another method chosen by your company and do it for yourself, not to make your boss happy! Be a student of the game and always keep learning. Scoring For MEDDPICC to be used effectively, you need to establish a scoring system that grades each of the 8 criteria of MEDDPICC (each letter of the acronym). Based on the overall score, you can then classify the opportunity in your forecast (typically as Pipe, Best Case, and Commit). To do this, first, establish a set of 4 to 5 key questions for each criterion. For instance, for 'M' (Metric), a question could be, “Is our Champion using our Metrics?”; for 'E' (Economic Buyer), a question could be, “Have we identified the Economic Buyer?”; and for 'P' (Paper Process), a question could be, “Have we identified all the signatories required before the contract can be signed?” as examples. Then, assign a score from 1 to 10, which you can divide into 4 evaluations: 1-3 would be red; 4-6 orange; 7-8 blue; and 9-10 green. A simpler way could be to grade for 1 to 4 with the same above color-codes. You get the idea. Finally, use PowerBI or Excel to create a dashboard that visually represents your opportunities, allows you to drill down into areas at risk, and helps you coach your team to build a plan to overcome obstacles. Or better yet, consider the following technologies. Welcome to Near Nirvana! Automate the Process and Analytics with Technology One of the biggest challenges in successfully implementing MEDDPICC is actually the resistance from sellers to manually input data into spreadsheets or CRMs. Any sales manager, head of sales, or CRO knows exactly what I'm talking about! Use AI-powered voice recognition of each conversation your seller has with their prospect to automatically enter this input into your CRM and keep your sellers on selling. Not everyone holds a PhD from MIT to engage in statistical modeling and process linear regressions all day. Fortunately, you don't need to. New and improved tools are emerging to not only fully integrate the MEDDPICC method into your CRM with built-in scoring and analytics. You can finally realize the full potential of these qualifying methods—the kind of success Mark Roberge achieved at HubSpot. Below are two promising vendors that have developed such integration with automation and smart analytics. Full transparency: I have not received any sponsorship or anything else to list them here. I recommend conducting your own research as there might be other products as well: www.ebsta.com glyphic.ai spiky.ai To keep learning: two great books I recommend: The Qualified Sales Leader – Proven lessons from a five-time CRO" by John McMahon “MEDDICC - The ultimate guide to staying one step ahead in the complex sale” by Andy White If you need help with your implementation of MEDDPICC or another method, schedule a call or Contact me at lvanhuffel@croforscale.com #meddpicc #sales #forecasting #qualification [1] https://www.ebsta.com/2024-b2b-sales-benchmarks/ [2] http://blogs.hbr.org/cs/2012/07/the_science_of_building_a_scal.html

A lot has been written and discussed about pricing strategy, yet we often repeat the same mistakes and overlook a critical factor: we're dealing with people! Pricing strategies are deeply entrenched in psychology. Next time you review your SaaS options, consider employing decoy, contrast, and other strategies influenced by behavioral economics. Sears and the Toaster’s story: Decoy and Asymmetric Dominance Effect In the 90s, Sears put in its stores an expensive toaster for something like $95 that was not selling well at all. Customers found it difficult to assess the value of the toaster in isolation and were hesitant to purchase it due to its high price. To address this, Sears introduced a second, less expensive toaster to the lineup for about $85. However, they remove key features that were only available with the more expensive one. This new toaster wasn't necessarily expected to sell in large volumes; its purpose was to make the original expensive toaster seem to be a better option: for only $10 more, customers could get the “better” toaster and all the full gizmos. With the addition of the less expensive option, customers could now make a comparison between the two, and guess what? The more expensive toaster started to sell a lot more than the new less expensive one. This strategy leverages the way consumers perceive value and make decisions based on comparative analysis. When given multiple options, people tend to choose the one that seems to offer more value in relation to the others, rather than making an absolute judgment on value. This tactic is today widely used in various industries to influence consumer choices, from consumer electronics to subscription services. Pricing Misconceptions This story illustrates a study published in the Journal of Marketing[1], which highlights common misconceptions consumers have about deals and discounts. "You walk into a Starbucks and see two deals for a cup of coffee. The first deal offers 33% extra coffee. The second takes 33% off the regular price. What's the better deal? "They're about equal!" you'd say, if you're like the students who participated in the study. And you'd be wrong. The deals appear to be equivalent, but in fact, a 33% discount is same as a 50 percent increase in quantity. Math time: Let's say the standard coffee is $1 for 3 quarts ($0.33 per quart). The first deal gets you 4 quarts for $1 ($0.25 per quart) and the second gets you 3 quarts for 66 cents ($.22 per quart). This example underscores the broader point that consumers often rely on non-quantitative reasoning and are influenced by the way offers are framed rather than their actual value. Basically, getting something extra "for free" feels better than getting the same for less. Actionable Insights 1. Perceived Value Over Actual Value: Consumers are more attracted to getting more for "free" than paying less for the same amount, highlighting the importance of how deals are presented. 2. Anchoring Effect: The first price consumers see sets a reference point for subsequent prices, making relatively cheaper items appear more attractive, regardless of their actual value. The best way to sell a $350 watch is to put a $30,000 one in front of it. 3. Avoidance of Extremes and the theory of 3 packages: Consumers tend to avoid products priced at either extreme, favoring moderation and perceived fairness in pricing. In this well-known study, people were offered 2 kinds of beer: premium beer for $2.50 and bargain beer for $1.80. Around 80% chose the more expensive beer. Now a third beer was introduced, a super bargain beer for $1.60 in addition to the previous two. Now 80% bought the $1.80 beer and the rest $2.50 beer. Nobody bought the cheapest option. Third time around, they removed the $1.60 beer and replaced with a super-premium $3.40 beer. Most people chose the $2.50 beer, a small number $1.80 beer and around 10% opted for the most expensive $3.40 beer. 4. Narrative Influence: People are more likely to justify a purchase based on comparative stories or narratives, such as getting a "better deal" compared to a more expensive option. This story is the reverse of the Sears and toaster one. In his book Priceless, William Poundstone explains what happened when Williams-Sonoma added a $429 bread maker next to their $279 model: Sales of the cheaper model doubled. Why? It makes the cheaper product look like a good bargain. Price differences give us a story and a motive: The $279 bread maker was, like, 40 percent cheaper than the other model – you’ve got a great deal! 5. Behavioral Cues: Simple changes in environment and presentation can significantly influence consumer choices. Savvy restaurants, for example, design their menus to draw our eyes to the most profitable items by things as simple as pictures and boxes. If you see a course on the menu that's highlighted, boxed, illustrated, or paired with a really expensive item, it's probably a high-margin product that the restaurant hopes you'll see and consider. 6. Emotional Decision-Making: Emotional reactions to perceived unfairness or bargains can override rational assessment of value. In the experiment mentioned by William Poundstone in his book Priceless: The Myth of Fair Value (and How to Take Advantage of It)[2], participants were offered a portion of $10 in a way that some offers were seen as unfair. The brain's response to these "unfair" offers, such as being offered only $1, was significant. It activated areas of the brain associated with pain and negative emotions, demonstrating how perceived unfairness in financial dealings can lead to strong emotional reactions. The flip-side is that bargains literally make us feel good about ourselves. Even the most useless junk in the world is appealing if the price feels like a steal. 7. Impaired Judgment Under Stress: Consumers are more prone to simpler decision-making and impulsive purchases when stressed, tired, or under the influence of alcohol. 8. Dislike for Transaction Costs: Consumers prefer subscriptions or bundles to avoid the pain of repeated payments, despite potential overall higher costs. 9. Attraction to Rebates and Warranties: These offer perceived added value, even when they may not be economically rational. 10. Fairness and Value Perception: Consumers are driven by a strong sense of fairness and comparative value, often based on limited information or cues rather than the intrinsic worth of a product or service. Example with a combination of decoy and contrast Let’s you want to sell the option 2 in the middle at $69. Option 1 is your decoy and option 3 your contrast. These insights reveal the complex interplay between cognitive biases, emotional responses, and contextual cues in shaping consumer behavior, highlighting the importance of understanding the psychological underpinnings of purchasing decisions. Need help to improve your negotiation skills and ability to influence? Schedule a call or Contact me at lvanhuffel@croforscale.com #pricing #pricingstrategies #negotiation #influence [1] https://www.theatlantic.com/business/archive/2012/07/the-11-ways-that-consumers-are-hopeless-at-math/259479/ [2] https://cxl.com/blog/product-pricing-strategies-and-techniques/

Around 2010, a group of researchers wanted to find out if teams have a collective intelligence as opposed to the sum of its individuals. This study was part of a broader effort to decode what makes some teams more successful than others, a question that has intrigued organizational psychologists and business leaders alike for decades. To do this, they began by recruiting 699 individuals ensuring a diverse mix in terms of skills, backgrounds, and personalities. These participants were then randomly assigned to 152 different teams. The goal was to observe how different teams interact, collaborate, and solve problems when faced with various cooperative tasks. By analyzing the behavior and performance of a large number of diverse teams, the researchers hoped to identify patterns, behaviors, and characteristics that distinguish high-performing teams from less effective ones. The teams were assigned a range of cooperative tasks that varied in complexity and nature. These tasks were designed to simulate real-world challenges that teams in organizational settings might face. Here are some of the exercises that were given: 1.The Marshmallow Challenge: This exercise involves teams working together to build the tallest free-standing structure they can, using a set number of spaghetti sticks, tape, string, and a marshmallow that must be placed on top. It encourages creativity, innovation, and iterative learning, as teams quickly realize the need for prototyping and testing their structures. 2. Escape Room Scenarios: Teams are placed in a scenario where they must solve a series of puzzles and riddles to “escape” from a locked room within a set time limit. This exercise tests teams’ ability to work under pressure, communicate effectively, and leverage each other’s strengths. 3. Egg Drop: Teams are tasked with designing a device or structure that can protect an egg from breaking when dropped from a certain height. This exercise fosters innovation, resourcefulness, and risk-taking, as teams iterate on their designs to find the most effective solution. 4. Survival Simulations: In this exercise, teams are given a scenario where they must prioritize a list of items or actions for survival in a wilderness or disaster scenario (e.g., stranded in the Arctic, lost at sea). It challenges teams to discuss, debate, and reach consensus under hypothetical life-and-death circumstances, highlighting decision-making processes and leadership dynamics. 5. The Barter Puzzle: Teams are given different pieces of several puzzles and must work together to complete their puzzles. However, some pieces are with the wrong team, requiring teams to negotiate with each other. This exercise tests communication, negotiation, and strategy, as teams must figure out what pieces they need and how to obtain them from others. 6. Group Jigsaw: Each team member is given a piece of information crucial to solving a problem or completing a task, but no one has the complete picture. The team must work together to share information and piece together the solution. This exercise highlights the importance of information sharing, active listening, and integrating diverse perspectives. Key Findings: The study revealed several critical insights into team dynamics and the factors contributing to a team’s success: 1. Equal Participation: High-performing teams tended to exhibit equal participation among members. This means that each team member had roughly equal speaking time, contributing their ideas and perspectives. This equality fostered a more inclusive and collaborative environment. 2. Social Sensitivity: Successful teams displayed high levels of social sensitivity. Team members were adept at picking up on non-verbal cues and understanding the emotional states of their colleagues. This empathy facilitated smoother interactions and conflict resolution. 3. Psychological Safety: The research underscored the importance of psychological safety within teams. Teams where members felt safe to express their thoughts, take risks, and admit mistakes without fear of ridicule or retribution performed better. This safe environment encouraged innovation and open dialogue. 4. Group Norms: The establishment of positive group norms was a hallmark of effective teams. Norms that emphasized respect, inclusivity, and shared goals helped in aligning team efforts and fostering a positive working environment. *** In 2008 and later 2012, as part of Google's broader effort to use data-driven approaches to improve organizational practices and enhance employee productivity and satisfaction, the company launched several initiatives, the most well-known being project Aristotle. "The biggest thing you should take away from this work is that how teams work matters, in a lot of ways, more than who is on them." —Laszlo Bock, former head of People Operations at Google Project Aristotle was a quest initiated by Google to understand why some teams excelled while others faltered. Google meticulously analyzed a wide array of data from over 180 teams within the company. The researchers expected to find that the best teams were an aggregation of top talents. However, the findings were counterintuitive. The success of a team wasn't significantly influenced by who was on the team but by how team members interacted, structured their work, and viewed their contributions. One of the pivotal discoveries of Project Aristotle was the importance of "psychological safety" – a term coined by Harvard Business School professor Amy Edmondson, and echoing the findings from the above research study. It refers to an environment where team members feel safe to take risks and be vulnerable in front of each other. Teams with high psychological safety were marked by traits such as mutual respect, openness, and empathy. Members of these teams felt confident that no one on the team would embarrass or punish anyone else for admitting a mistake, asking a question, or offering a new idea. The overarching message from Project Aristotle and the subsequent research is that the "soft" elements of teamwork, such as emotional intelligence, empathy, and creating a safe space for dialogue, are crucial for a team's success. Turns out that they are five key norms that matter and make teams work successfully: 1. Psychological Safety: By large, the most important one. Teams need to feel safe to take risks and be vulnerable in front of each other. 2. Dependability: Team members need to know they can depend on one another. 3. Structure and Clarity: Teams need to have clear roles, and defined goals. 4. Purpose: Teams need believe their work is personally meaningful. 5. Impact: Teams need to feel their work matters. To ensure psychological safety, the research conducted by Google recommends applying the followings: Foster Open Communication: Encourage team members to speak up, share their ideas, and voice their concerns without fear of retribution or ridicule. This can be facilitated by regular and structured team meetings where everyone is invited to contribute. Show Empathy and Support: Leaders and team members should demonstrate understanding and support for each other's personal and professional challenges. This can be achieved through active listening and acknowledging the emotions and contributions of team members. Encourage Risk-taking and Experimentation: Make it clear that taking calculated risks is valued, even if it doesn't always lead to success. Celebrate the learning that comes from failure as much as the success itself. Lead by Example: Leaders should model the behavior they wish to see by admitting their own mistakes, asking for feedback, and showing vulnerability. This sets a precedent for the team and contributes to a safer environment. Establish Clear Norms: Develop and reinforce team norms that promote respect, inclusivity, and mutual support. These norms should be explicitly stated and revisited regularly to ensure they are being upheld. Ensure Everyone's Voice is Heard: Implement practices such as "round-robin" sharing in meetings, where each person has a turn to speak, to ensure that all team members have the opportunity to contribute. Provide Training: Offer workshops and training sessions on emotional intelligence, active listening, and constructive feedback to equip team members with the skills necessary to contribute to a psychologically safe environment. In his book "Work Rules, insights from Google, Laszlo offers a wealth of insights and practical advice on cultivating a high-performing and happy workforce. Here are some of the key takeaways: Give Your Work Meaning: Bock emphasizes the importance of connecting work to a greater purpose. People are more motivated and engaged when they understand how their work contributes to broader goals and makes a meaningful impact. Trust Your People: This principle relies on the belief that it's better to give employees too much freedom than not enough. Trusting your employees to do the right thing leads to more innovation and empowerment. This includes transparency with information and involving employees in decision-making processes. Nudge: Small nudges can lead to significant changes in behavior. Bock talks about how slight changes in the work environment or in the way information is presented can significantly influence employee behavior and decision-making. Focus on the Two Tails: Develop the best performers and support those who are struggling. Bock suggests investing in the highest performers to help them grow even further, while also providing support and training to the lowest performers to help them improve. Be Frugal and Generous: Bock points out that generous employee benefits and perks are not just lavish expenditures but strategic investments in employee happiness and productivity. At the same time, the company maintains frugality in areas that don't directly contribute to employee satisfaction or organizational effectiveness. Default to Open: Bock advocates for sharing as much information as possible with employees, arguing that transparency fosters trust, aligns everyone with the company's goals, and enables better decision-making at all levels. Enjoy!: Finally, Bock emphasizes the importance of finding joy in your work and continuously seeking ways to make it more meaningful, thus creating a virtuous cycle of improvement and satisfaction. The key to an effective team lies not in the individual prowess of its members but in their collective behavior and the establishment of conducive group norms. Psychological safety emerges as a cornerstone of high-performing teams, enabling members to navigate the complexities of collaboration without the fear of negative repercussions for speaking up or making mistakes. This paradigm shift from individual to collective efficacy underscores the nuanced interplay of human dynamics in achieving organizational excellence. To learn more, two great books I recommend: Work rules - Insights from Google by Laszlo Bock Smarter, Faster, Better from Charles Duhigg If you need help to improve your team performance, schedule a call or Contact me at lvanhuffel@croforscale.com #team #teamwork

According to a Gartner survey conducted in November and December 2022, a staggering “75% of B2B buyers prefer a rep-free experience. [1].” What does it say about sales professionals? Are sellers that boring that B2B buyers would rather not talk to them? Or is it that they don’t bring much value to the conversation and are just perceived as motivated by their self-interest? Since reps usually belong to the extravert category, I vote for the latter. The survey underscores a growing divide and disillusionment with traditional sales interactions. This trend is a clear signal that sellers must bring more to the table than just product knowledge or a persuasive pitch. They need to deliver real value and insight, transforming the sales experience from a transactional encounter into a consultative partnership. The Unparalleled Impact of Sales Experience Several years ago, CEB -acquired by Gartner since, published a study that is counter-intuitive to most sellers ─and still is. This study shed light on the drivers of customer loyalty, revealing that the sales experience accounts for a staggering 53% of the loyalty equation. To this day, each time I ask my audience of sellers and sales managers to guess which one of these four drivers is the top one, Sales Experience rarely comes first: But what sets a superior sales experience apart? The study revealed that it boils down to five key characteristics of successful sellers and customer's expectations: 1. Offering Unique, Valuable Market Perspectives: Today's buyers are inundated with information but starved for insights. Sellers who can help customers to identify new opportunities to cut costs, increase revenue and mitigate risks in ways they themselves have not yet recognized not only capture attention but also earn trust and credibility. 2. Navigating Alternatives: Buyers face a plethora of options. A seller who acts as a guide, helping customers navigate these alternatives, becomes an invaluable partner in the decision-making process. A large majority of deals nowadays are lost to indecision—61%, according to a study by Ebsta, which is more than those lost to maintaining the status quo. Offering choices is an effective strategy to minimize this risk. 3. Avoiding Potential Land Mines: The path to purchase is fraught with risks and uncertainties. Sellers who preemptively address potential problems or "land mines" can save their customers from future headaches, fostering a sense of security and trust while avoiding buyer’s regret. 4. Educating on New Issues and Outcomes: The most impactful sellers are those who enlighten their customers about new challenges and opportunities, expanding their understanding and helping them to envision unforeseen possibilities. 5. Garnering Widespread Organizational Support: Sellers who have the backing of their entire organization can draw upon a wealth of resources and expertise, ensuring that they can fully address their customers' needs and challenges. The Customer-First Approach: A Win-Win Strategy Embracing a customer-first approach means redefining success. Instead of measuring achievement by the number of deals closed, albeit an important one, the new metric is the customer's success. This paradigm shift requires a deep understanding of the customer's business, their industry, and the specific challenges they face. It's about becoming a trusted advisor whose primary goal is to help the customer achieve their objectives. The Power of Insightful Selling In a market where information is abundant, the true currency is insight. Sellers must go beyond understanding their product; they must have a deep grasp of their customer's industry, market trends, and the broader economic landscape. This knowledge enables them to bring new, sometimes provocative, ideas to the table—ideas that challenge the customer's thinking and introduce them to new solutions and strategies they hadn't considered. Experts recommend to dedicate 20% of our time in continuous learning. A time sellers could use to cultivate these insights while marketing leverages analytics to identify patterns they can embed into their company’s narrative. The Role of Provocative Insights Remember the 2008 subprime financial crisis? Seems like a long time ago, doesn’t it? Well, the downturn of the economy seems to be a reminiscence of that time. In March 2009, Geoffrey Moore, the legendary author and father of ‘Crossing the Chasm’, published in the Harvard Business Review an article he coined “In a downturn, Provoke Your Customers” (yes! I kept that article since then). The idea was that, at a time when budget got scarcer and decisions were subject to high scrutiny, developing a provocative point of view was the right way to go to reach the level of attention at the right executive level. Since then, The Challenger Sale methodology has been advocating for a sales approach that is not afraid to challenge the customer's assumptions and present thought-provoking perspectives. This doesn't mean being confrontational, of course. Instead, it's about respectfully presenting evidence-based insights that prompt customers to view their problems and potential solutions in a new light. This approach can be particularly effective in a market where buyers are knowledgeable and have access to vast amounts of information. Building a Culture of Customer Advocacy To truly adopt a customer-first approach, organizations must cultivate a culture of customer advocacy. This means aligning every department and function with the goal of customer success. Sales teams must work hand in hand with product development, marketing, and customer service to ensure a cohesive and supportive experience for the customer. This organizational alignment ensures that the seller's insights are backed by a team ready to support the customer's journey at every step. If you're looking for an anecdote that embodies a culture of customer-centricity, consider this: It's said that after John Chambers became CEO of Cisco, he was several hours late to his first board meeting. He made a deliberate choice to prioritize resolving a major issue for one of his largest customers instead. This decision reflected his customer-first approach to leadership, which has become legendary." Buckle-up! 2024 is going to be interesting. Everyone in the B2B market agrees to recognize that all signs from late 2023 indicate that 2024 will be increasingly challenging. If you are in a start-up mode, you know that access to funding has become a lot harder. In the world of great uncertainty, we are living in, if anything, selling to B2B enterprise buyers is becoming a lot harder. In a world where B2B buyers are increasingly seeking rep-free experiences, the value of a seller lies in their ability to act as a trusted advisor, offering unique insights and solutions that genuinely address the customer's needs. By prioritizing the success of their customers over short-term gains, sellers can build lasting relationships that drive loyalty, repeat business, and ultimately, sustainable growth for both parties. This journey requires a deep commitment to understanding and advocating for the customer, backed by a culture that supports this mission at every level of the organization. If you want your sellers to learn how to engage in valuable and insightful conversations with your B2B buyers, and construct though-provoking insights in order to help your customers to identify new opportunities in ways they themselves have not yet recognized, schedule a call right from this website. We can discuss how I can assist you in overcoming your challenges. Contact me at lvanhuffel@croforscale.com #customercentricity #customerinsight #customerjourney #customerfirst #challenger [1] Gartner survey: https://www.gartner.com/en/newsroom/press-releases/2023-03-07-gartner-survey-finds-aligning-commercial-functions-as-sales-leaders-top-priority-for-2023

On November 4, 2010, Qantas Airways Flight 32[1] took off from Singapore enroute to its eight-hour flight to Sydney. Captain Richard Champion de Crespigny, was in command of the Airbus that day, and with his crew, managed to avoid what could have been a catastrophic disaster. The flight faced a critical challenge when an engine exploded shortly after takeoff, causing extensive damage to the aircraft's systems. Despite the overwhelming number of alarms and the severe malfunction of the plane's systems, de Crespigny and his crew remained composed. They prioritized their tasks, focusing on what was still operational rather than being overwhelmed by the failures. What saved the four hundred and forty passengers onboard is what psychologists called ‘mental models[2],’ and has become one of the most important topics in cognitive psychology research. Mental models are essentially frameworks or representations that individuals form in their minds to simplify and understand complex real-world situations. These models enable individuals to process information, make predictions, and navigate challenges by filtering irrelevant details and focusing on what is important. In the context of aviation, where pilots must manage vast amounts of data and make split-second decisions under stress, the application of mental models becomes critically important. Captain de Crespigny's handling of Qantas Flight 32 is a prime example of the effective use of mental models. Even before the flight, de Crespigny was proactive in engaging his crew in discussions about potential emergencies, emphasizing the importance of visualization and anticipation. This preparatory practice was not just about rehearsing procedures but about building and reinforcing mental models that would enable the crew to respond effectively to unforeseen events. When the aircraft encountered a catastrophic engine failure shortly after takeoff, the situation rapidly escalated into one of the most severe mid-air crises in modern aviation history. The aircraft suffered extensive damage, with critical systems failing and alarms sounding incessantly. In this high-pressure environment, the pre-established mental models played a crucial role in the crew's response. De Crespigny and his team had to sift through the flood of information, alarms, and system failures to identify the most critical issues that needed immediate attention. One of the key moments in the crisis was when de Crespigny decided to shift the mental model he was using to understand the situation. Faced with an overwhelming array of malfunctions and a rapidly deteriorating aircraft, he chose to simplify his approach by imagining the Airbus A380 as a much simpler aircraft, akin to a Cessna he used to flight in his early days. This shift in perspective allowed him to cut through the complexity, remove the “noise” and focus on the fundamental aspects of flying the plane —such as maintaining lift, controlling speed, and ensuring a safe landing. “Most of the time, when information overload occurs, we’re not aware it’s happening—and that’s why it’s so dangerous.” —Barbara Burian, a research psychologist at NASA. By not being rigidly tied to one way of thinking, de Crespigny was able to reassess the situation and adopt a more manageable framework that focused on the essentials of flight, despite the aircraft's damaged state. The successful landing of Qantas Flight 32, despite the extensive damage and the unprecedented nature of the emergency, underscores the importance of mental models when a decision must made facing sudden events. It highlights how the ability to construct, adapt, and apply these models can enable individuals to navigate through chaos and complexity, focusing their attention on the most critical elements of a situation. Actionable Insights — 7 Ways to Use Mental Models in Sales Situations. In broader terms, mental models are not just applicable in emergency situations. They are tools that everyone can use to improve decision-making, problem-solving, and attention management in daily life. By developing and refining our mental models, we can become better equipped to handle the challenges we face, whether they are in the workplace, in our personal lives, or in critical, life-threatening situations. A group of psychologists from the consulting company Klein Associates, economists and a sociologist from MIT started studying why most productive people builds mental models. Their research identified a specific group of people they called the Superstars[2]. Superstars use mental models to their advantage by constantly generating and refining their understanding of the world around them. They are adept at constructing narratives — lots and lots of them, and explanations for the events they observe, enabling them to anticipate outcomes and prepare for various scenarios. This proactive approach allows them to focus their attention effectively, make informed decisions, and adapt quickly to new information or changes in their environment. In sales situations, mental models can be particularly useful for understanding customer needs, anticipate objections and be able to react immediately to unforeseen situation like when a skeptic throw a ‘curve at you’ or your boss suddenly asks you a question, and navigating complex negotiations. Here are several actions that individuals in sales can take to use mental models to their advantage: 1. Anticipate Customer Needs: Develop mental models of your customers' businesses, challenges, and goals. By telling yourself stories about your customers' day-to-day operations and the problems they face, you can better anticipate their needs and tailor your solutions accordingly. 2. Prepare for Objections: Envision potential sales meetings in detail, including possible objections or questions that customers might raise. By creating mental models of these interactions, you can prepare thoughtful responses and strategies to overcome objections. 3. Understand Market Dynamics: Build mental models of the market and industry trends. By constantly updating your understanding of the market, including competitors' strategies and emerging opportunities, you can position your offerings more effectively. 4. Visualize Successful Outcomes: Use mental models to visualize successful sales interactions and outcomes. This can help build confidence and refine your sales approach, making it more likely that you'll achieve the desired results. 5. Analyze Past Interactions: Reflect on past sales meetings and interactions, constructing mental models of what went well and what could have been improved. This reflective practice can help you learn from experience and adapt your approach for future success. 6. Engage in Scenario Planning: Develop mental models for various sales scenarios, including best-case and worst-case outcomes. By thinking through different scenarios, you can be better prepared for unexpected developments and remain adaptable in your sales strategy. 7. Collaborate and Challenge: Share your mental models with colleagues and invite them to challenge your assumptions. This collaborative approach can help refine your models, making them more robust and effective in real-world sales situations. Research shows that managing attention and building mental models are linked to higher earnings and better grades, and these skills can be developed by anyone through the practice of constructing mental narratives about their surroundings. By actively building and refining mental models, sales professionals can enhance their ability to stay focused during stressful situations, understand and anticipate customer needs, navigate complex sales environments, and achieve better outcomes in their interactions. If you are looking for help improving the productivity and focus of your sales organization, let's set up a time to discuss. You can ask to schedule a call right from this website. Contact me at lvanhuffel@croforscale.com [1] https://www.tumblr.com/a380flightdeck/103960542460/qantas-flight-32-was-a-qantas-scheduled-passenger?source=share [2] Smarter Faster Better – Chapter 3, Charles Duhigg – Publisher Random House